City of Tyler to spend $30,000 on audit of health care costs

March 04--The city of Tyler will spend $30,000 to audit how much it is spending on health insurance claims for employees.

The Tyler City Council has approved paying the money to the private firm McGriff, Siebels and Williams to oversee the audit.

The audit comes as the city continues to attempt to lower how much it is spending on health insurance premiums and claims for employees.

Lance Pendley, a senior vice president for McGriff, gave a presentation to city councilmembers at their meeting on Wednesday, shortly before the council approved the audit.

From 2016 to 2017, the city lowered what it spent on medical claims from $9.5 million to $8.3 million and what it spent on prescription drug claims from $4 million to $3.4 million, according to the presentation.

The amount spent in 2017 on medical claims is above the $6.5 million the city spent on medical claims in 2015, but slightly below the $3.6 million the city spent on prescription drug claims in 2015.

"We've gotta all understand that we had a huge spike in claims in one fiscal year (2016) and the city hired McGriff to come back in and fiscally balance that," Pendley said. "So when we talk about savings, we're talking about reducing costs over a very expensive fiscal year."

The city currently self-insures for part of its health insurance costs and uses HealthFirst to administer claims. Pendley said McGriff would like to use the $30,000 to bring in an outside firm to audit how HealthFirst handled claims in 2017.

"We just want to make sure we're doing our due diligence, making sure that HealthFirst is doing what we paid them to do, which is pay our claims accurately and effectively," Pendley said.

"I think more of my self-funded clients should go in and audit ... the third party administrator, every couple years, just to make sure that everyone is paying claims correctly and doing what they're supposed to do," he said.

In addition to having McGriff performing the audit, Pendley said he would return to the council on May 23 to discuss whether city employees should be given different options for health insurance plans.

There are 785 employees covered under the plan. The city currently pays the majority of premium costs for each employee, ranging from 75 percent of the premium on a family plan to 91 percent of the premium on an individual plan.

Pendley said there are several different plan designs on the table. One type under consideration is a high-deductible plan, which would cost the city less money, but cost employees more out of their own pockets.

If the city does not want to go straight to a high-deductible plan, Pendley suggested the city start offering a low-premium, high-deductible plan in addition to what it already offers so that employees can have a choice.

District 1 City Councilor Linda Sellers told Pendley his firm has already done a good job on saving money for the city.

"Thank you for the struggles we went through," she said. "I think it's paying off today."

District 5 City Councilor Bob Westbrook agreed.

"We've just seen the results of transparent oversight in our plan, and we've seen the savings in that," Westbrook said. "Is it possible that we can get a copy of those audit results but also any recommendations for savings management of the plan from McGriff?"

Pendley said he could bring in the results when the audit is finished.

District 3 City Councilor Ed Moore saw the issue differently. He framed employee health insurance as how much the employees pay for their care.

"We're talking about savings overall for the city," Moore said. "Let's consider how much we can save coming out of the employee's pocket also. That's the deal with me."

Pendley agreed. He said the city should keep Moore's comments in mind so it can recruit and retain the best employees.